A linchpin of the American intellectual property system, the Patent and Trademark Office issues legal protections to companies and inventors in an effort to ensure that they receive economic rewards for their ingenuity. But the agency is facing a serious backlog on patent applications that could stall the development of new technologies.

PTO has proposed an overhaul aimed at addressing that concern. The plan calls for changing the review process for patent applications by outsourcing key functions and seeking closer cooperation with foreign counterparts. Officials tout the reform effort as an economic necessity, but aspects of it have caused consternation among groups representing the interests of federal workers and among some industry organizations.

Deputy PTO Director Jon Dudas said budgetary constraints and the increase in applications spurred by the electronic commerce market have caused "a tremendous backlog of patent applications." Currently, more than 450,000 applications need to be reviewed, and patent pendency, the time from application to issuance of a patent, is about 27 months.

"Crisis is a strong word," Michael Kirk, executive director of the American Intellectual Property Law Association, told a congressional committee, "but we believe that it aptly describes the situation. ... The reliability of patents and trademark registrations is increasingly being called into question."

The backlog could put new products and services at risk, experts said. Without the certainty of a patent or a trademark behind those products, investors are less likely to provide venture capital or other forms of funding for them because they are not guaranteed exclusive rights.

To combat those problems, PTO Director James Rogan, a former Republican House member from California, last year unveiled the 21st-Century Strategic Plan, which aims to ameliorate market uncertainty by improving the quality of patents and trademarks and reducing patent pendency. The plan outlines a series of procedural changes designed to eliminate redundancies in the review process and to bolster training for employees.

Dudas said the mounting application backlog is tied to "redundant" searches for "prior art," or existing inventions that would be grounds for dismissing applications. To remedy that problem, the strategic plan calls for outsourcing some duties of government patent examiners.

The proposal also seeks closer cooperation with patent offices in other countries and with private companies to enable patent examiners to use previously conducted searches for prior art. For companies that apply globally for patents, the plan would build on prior-art searches already conducted in places such as Europe or Japan. Inventors also could pay reduced fees for private searches and then submit that information to PTO.

"If it's a good search, [PTO] can use it. ... [I]f they feel its not a good search, they can seek additional time to do an additional search," Dudas said. "It's akin to a judge having clerks doing legal research."

But that proposal has faced a heap of criticism. "We think we can do a better job searching," said Ronald Stern, president of the Patent Office Professional Association, the labor organization for government-employed patent examiners. "We can give the patent community a better job at a cheaper price than any alternative."

He argued that separating prior-art searches from examinations would diminish the quality, because the examiners would not have as much knowledge to properly assess applications if they rely on a third-party searches.

PTO officials said the strategic plan does call for more examiners. However, Congress also has mandated that the agency cannot "hire its way" out of its problems, Dudas said, but instead must make its processes more efficient.

To that end, outsourcing is only one aspect of the plan. PTO also is considering more frequent testing and training programs to sharpen the skills of patent and trademark examiners. And the agency wants to establish protocols "to ensure that applications receive more reviews by more examiners," Dudas said.

The plan also calls for changes in the way the agency reviews approved patents. The goal is to find a more efficient and inexpensive way to resolve disputes over newly issued patents.

Various industry groups, including the Intellectual Property Law Association and the International Trademark Association, favor the proposal despite planned hikes in fees for trademark and patent applications. A measure pending in Congress would authorize fee increases of roughly 15 percent.

But that bill also seeks to require that all fees generated from such applications be reserved for PTO use. That provision is aimed at eliminating the practice in recent years of diverting money raised from patent and trademark fees to unrelated federal programs. Many intellectual property interests have voiced support for the bill as long as any higher fees could not be used to subsidize other governmental operations.

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